Who Wanted What?

Monday, 13 December 2010 08:05 By James Kwak, The Baseline Scenario | Op-Ed | name.

Who Wanted What?
Austan Goolsbee, chairman of the Council of Economic Advisers. (Photo: White House White Board)

Look, I’m familiar with the argument for the tax cut deal. It’s not a terrible argument. In simple form, it goes, the top priorities are to stimulate the economy and to cushion the impact of unemployment, and a two-year tax cut extension was worth it to get that, especially since we can kill the Bush tax cuts in 2012. Now, no one who wasn’t born yesterday buys that bit about killing the Bush tax cuts in 2012, but you could still make the argument that two years of stimulus is worth making the tax cuts effectively permanent. (I don’t agree, but it’s not a crazy argument.)

But that’s not Austan Goolsbee’s argument on YouTube.

Here’s his slide:

Austan Goolsbee on White House White Board

Basically he’s trying to convince you that Obama won: Republicans wanted the top-end tax cuts and Obama wanted the “middle-class” tax cuts, and Obama conceded the top-end tax cuts, but in exchange he won lots of other great things: unemployment insurance extension, some sweeteners to the earned income tax credit, American Opportunity tax credit (for college), some sweeteners to the child tax credit, lower payroll tax, and an extension of some business investment credits. Notice which column he put them in.

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To call this framing disingenous would be kind. Republicans also wanted the “middle-class” tax cuts; they were the Bush tax cuts, after all, and I don’t recall any Republican saying we should only extend them for the very rich.

And if I try to imagine what it would be like to be a Republican, I’d have to say I probably like the extension of the investment tax credits (because they’re for business, and they’re LOWER TAXES); I probably like the American Opportunity credit (first because it’s not very progressive–you have to be going to college in the first place, and it only phases out above $160,000 for married filers–and second because it’s LOWER TAXES); and I probably like the payroll tax cut (first because it’s a tax cut that benefits everyone–the more you make, the more it benefits you, up to the cap–second because I like anything that hurts the funding for Social Security, and third because it’s LOWER TAXES). I’m probably neutral on the child tax credit; I like subsidizing families, and it is LOWER TAXES, but this one might be a little bit progressive. And I’m probably against expanding the EITC (because it feels like welfare to me), and I’m definitely against extending unemployment benefits (because I think they’re all deadbeats).

So I would reorganize this as follows:

  • Both sides wanted tax cuts for the lower 98%, the payroll tax cut, the investment tax credits, and the American Opportunity credit.
  • Obama wanted the EITC expansion, extended unemployment benefits, and the sweetened child tax credit.
  • Republicans wanted tax cuts for the top 2%.

I’d say Republicans got a pretty good deal, especially since, as Goolsbee says, everything in the second bullet is temporary, while many observers are thinking today that the third bullet is forever.

I just noticed, thanks to Ezra Klein, that Goolsbee’s argument, minus the crazy claim that tax cuts for the lower 98% were not something Republicans wanted, is the core of the White House’s marketing campaign:

Last modified on Monday, 13 December 2010 11:08